As negotiations to settle a LIPA tax challenge case with the Town of Huntington come down to the wire, a town board member has filed suit against LIPA, National Grid and the town, arguing the case involving the Northport power plant is illegal.
Town board member Eugene Cook on Monday filed suit in state Supreme Court in Riverhead seeking a declaratory judgment that LIPA never received state Public Authorities Control Board approval for its contract with the National Grid power plants and its 10-year effort to challenge the taxes on four power stations across Long Island, including Northport.
A senior LIPA official took exception to Cook’s claim, saying that the 2013 contract with National Grid did not require PACB approval and that LIPA “has a right to grieve unfair tax bills in the same way.”
He added, “The councilman’s latest theory is unrealistic and distracts from ongoing talks to work out a fair compromise” with the town.
LIPA and Huntington have been involved in more serious settlement negotiations in recent weeks at the urging of a state Supreme court judge, who is expected to render a verdict in the case, sources have told Newsday. LIPA wants to reduce property taxes for the Northport Power Station, for which it pays some $84 million annually.
Its settlement offer to date has been to reduce the taxes it pays by 50% over seven years while forgiving upward of $650 million in tax refunds it would be due if it wins the case. Huntington town has argued the $3.5 billion assessment for the plant is proper given that Northport is Long Island’s largest power plant, providing critical power to the region.
Huntington Town attorney Nicolas Ciappetta said the town was still reviewing the suit and declined to comment further.
Cook’s court filing is the latest effort to undo the tax challenge case. Other initiatives included a proposal to condemn the Northport plant and an ongoing case that is on appeal that cited assurances by former LIPA chief Richard Kessel never to challenge the taxes on the plants.
Lawrence Kelly, an attorney for Cook who said that he and the council member are funding the case, said timing of the filing was intentional. “I know there are going to be discussions today or tomorrow” to try to settle the case, he said. “That’s why we wanted to get this in before any intense settlement discussions occur.”
In the motion for declaratory judgment, Cook argues that LIPA’s 2007 and 2013 contracts with National Grid Generation for use of the power plants is invalid without approval of the PACB, which is made up of representatives from the governor’s office, the Senate and the Assembly. LIPA also didn’t seek approval to file tax challenges with the PACB, the suit argues, noting the $6 million LIPA has purportedly spent in legal retainers to a tax challenge law firms exceeds a $1 million PACB threshold for board approval.